Facebook’s Free Basics — the company’s zero-rated mobile service — has been under fire in India over net neutrality violations for months, and now the country’s regulator has weighed in hard on the issue: FreeBasics and services like it have been banned, according to an announcement from TRAI.

Facebook has issued a statement in response to the ruling that looks like it will continue to work on ways of growing its service, despite this obvious setback.

“Our goal with Free Basics is to bring more people online with an open, non-exclusive and free platform,” a Facebook spokesperson said in a statement. “While disappointed with the outcome, we will continue our efforts to eliminate barriers and give the unconnected an easier path to the internet and the opportunities it brings.”

TRAI notes that the regulations will be in place for two years but may be open for review — which could see Facebook tweak FreeBasics and try to get the service turned on again.

Companies that violate the rules will be fined 50,000 rupees per day (around $740/day), according to the ruling, up to a maxiumum of 5 million rupees. Those numbers are negligible for Facebook, which has invested millions in this program, but it’s a crucial public opinion victory against the company that is at stake here.

FreeBasics is Facebook’s strategy to build up its user base in developing parts of the world by teaming up with carriers in local markets to give free access to specific sites (like Facebook) by way of a group it founded called Internet.org. In India, Facebook had been working with Reliance Telecom to offer the service.

To be clear, the announcement and the wider report that lay out the conclusion in greater detail do not single out Facebook or FreeBasics by name, but it was the emergence of this program that caused outcry and prompted the investigation by the regulator. The new rules, furthermore, outline the essentials of FreeBasics as the kind of service that will no longer be allowed:

No service provider shall offer or charge discriminatory tariffs for data services on the basis of content.

No service provider shall enter into any arrangement, agreement or contract, by whatever name called, with any person, natural or legal, that has the effect of discriminatory tariffs for data services being offered or charged by the service provider for the purpose of evading the prohibition in this regulation.

Reduced tariff for accessing or providing emergency services, or at times of public emergency has been permitted.

Financial disincentives for contravention of the regulation have also been specified.

Facebook is possibly the most high-profile advocate of unmetered selective service, but there have been others like Flipkart that have tried to team up with carriers like Airtel to provide unmetered service around their specific mobile apps.

It’s not clear how specific carriers versus content providers are being impacted by today’s rules.

The ruling comes after TRAI opened a consultation with key stakeholders in December and an open house forum to discuss the rules in January.

While this may be a victory for net neutrality supporters, others might see it as a step back for the wider growth of smartphone usage in the country, where a large part of the population cannot afford services without subsidies.

But as a solution to that problem, FreeBasics has been something of a PR disaster for Facebook, with even the company’s attempt to start a “Save FreeBasics” campaign backfiring after it sparked controversy.

Those trying to get the regulator to weigh in unsurprisingly celebrated today’s news:

“We applaud TRAI’s finding against differentially priced data services, and are delighted by the regulator’s recognition of the irreversible damage that stands to be done to the open Internet by allowing differential pricing,” said Mishi Choudhary, executive director, SFLC.in, in a statement. “The Internet is no more and no less than a ‘dumb pipe’ delivering data to and from its users. Differential pricing runs counter to this fundamental premise, which has had no small role to play in the Internet’s explosive growth. In this context, TRAI’s latest Regulations are a big step in the right direction, and secure India a position amongst the select few nations to have accorded legislative respect for the principle of network neutrality. Further, we specially appreciate the fact that TRAI’s decision has come in the form of immediately enforceable Regulations as we had requested, and not recommendations that require legislative or executive sanction.”

We have reached out to Facebook for comment for this story. We will update this post as we learn more.